Thinking behind the case of merger and acquisition of chain pharmacies

The increase in concentration of the pharmaceutical retail industry is the Ministry of Commerce's plan for the chain pharmacy industry, and the fastest way to increase the degree of concentration is not the expansion of endogenous (self-opening) stores, but the expansion of expansion (mergers and acquisitions). However, from the perspective of the first half of this year, the expansion of chain pharmacies has not been as warm as expected. The reasons are nothing more than the following:

M & <br> <br> capital is not active now, the drugstore chain of mergers and acquisitions more just between pharmacies, but can not be ignored is that capital in the pharmaceutical retail industry but in reality is not enough, or that, in Prior to the listing of several chain pharmacy giants, mergers and acquisitions will not be accelerated, and merely relying on mergers and acquisitions within the chain pharmacy industry will not have greater action and scale.

At the same time, what needs to be reminded is that if financing is insufficient, mergers and acquisitions between chain pharmacies will occupy suppliers’ money and affect business operations. Therefore, this is a stinking game that can stink so badly, and it is a matter of severity. This caused the suppliers to collectively fail to supply them, which in turn led to disastrous consequences.

In essence, mergers and acquisitions of chain pharmacies need to be intervened by industrial capital, commercial capital, VC, PE, and various other funds, so that they can form a feast for mergers and acquisitions.

M & A assessment is not perfect <br> <br> Indeed, the drugstore chain's own assets and fixed assets is not large, but it is difficult to assess intangible assets - the house is rented, commercial and industrial products. In addition, there is little difference between the propaganda investment and the chain drugstores in the same region, and the brand value of the chain pharmacies does not produce a large gap.

As a result, it is very difficult to evaluate the profitability of chain pharmacies, which requires more professional people and more scientific methods. This is precisely the current lack of chain pharmacies in the M & A process. In addition, even though there have been some due diligences, more than just due diligence financial personnel have determined the profitability of the chain pharmacies by viewing and analyzing the financial statements. It is difficult to reflect the real situation.

Therefore, the establishment of a set of due diligence scientific indicator systems and scientific assessment methods, so that the results of due diligence is scientific and accurate, so that both buyers and sellers can be fair trade, and to achieve a win-win situation must also be resolved in the chain pharmacy mergers and acquisitions.

M & A gap in demand

Because there is no scientific due diligence, in the M & A process, the seller always overestimates their own value, wants to sell a good price, get a higher price-earnings ratio and brand premium; and buyers always want to lower the price, reduce the purchase total cost. In the mergers and acquisitions of chain pharmacies, there are also many cases of failure due to the large gap between the two parties in the purchase price. In addition, the resettlement issue of the original management team of the acquired party is also the key to successful M&A. For the acquired party, the dissolution of the original team will involve a series of problems, so it will not accept large-scale layoffs; but for the merger party, if the original team is really problematic without major surgery, The management resistance after M&A will be great. At the same time, some chain pharmacies that are located in the form of snakeheads are often private rising stars or family businesses and will not be easily sold. Therefore, the chain pharmacies that are willing to sell are mostly companies with poor business and site selection. In this way, the demand and supply side will find it difficult to match.

M&A fails to meet expectations <br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br> For various reasons, if there is no news report, if it has not done better, is in an integrated run-in period, or is worse than before, or if there has been no mass disclosure of the amount of post-merger sales and profits, it has been disclosed. The news that some branches of pharmacies in different locations are closed, or that business is difficult or not profitable, will make the capital market more cautious about the mergers and acquisitions of chain pharmacies. However, if mergers and acquisitions do not output corporate culture, output talents, and output management, in order to achieve the final output of goods, it is difficult to achieve the results of 1+1≥2 expected by most chain pharmacies.

M & A side is not ready <br> <br> acquirer lack of preparation is also a key factor in the failure of mergers and acquisitions, such as M & A side no more reserve personnel management, recruitment of new corporate culture and management of the lack of recognition and so will generate resistance merger .

More serious problems are also manifested in the selection of expatriates in different places. When chain pharmacy operations cannot be exported in other areas, the key to the success of the operation will be concentrated on the output manager. However, there are few chain pharmacies that have the ability to store store managers and store managers, and the store managers are few. Most of them are women. Therefore, the problems caused by many foreign assignments such as family child care are also involved.

In addition, the purchase of companies and purchase of goods is not the same, mergers and acquisitions must be systematic thinking and gradually change, such as product output there is the problem of regional category differences, and each of the chain of pharmacies to be acquired also have their own high-margin group products Change is very difficult, and it will also impede the integration of procurement.

At the same time, the unified information system is also crucial for off-site mergers and acquisitions. It is an extension of the sense organs such as "eyes and ears." However, unified information systems in different places not only cost a lot, but also need to be cooperated by all the personnel of the acquiring party to succeed, and these all require the accumulation of time.